![]() The code contemplates that dismissal will return the parties to their prebankruptcy positions, except to the extent the bankruptcy court orders otherwise. Under the code, there are three ways to end a Chapter 11 case: confirmation of a reorganization plan, conversion to a Chapter 7 liquidation, or dismissal. Impaired classes - those whose legal, equitable or contractual rights are altered by the plan - may prevent confirmation of a plan that does not respect the priority rules set out in Chapter 11. In a Chapter 11 bankruptcy, the bankruptcy court considers a reorganization plan that assigns the various claims and interests to classes and specifies the treatment each class will receive. In a Chapter 7 bankruptcy, the company’s assets are liquidated and distributed to creditors in accordance with statutory priorities. The bankruptcy code allows a company to file under either Chapter 7 or Chapter 11. A broad holding or rationale could hamstring bankruptcy-court discretion to allow interim distributions in a wide variety of areas, casting doubt on a range of existing practices. If the Supreme Court does reverse the appeals court’s decision upholding Jevic’s structured dismissal, though, it may well tread carefully and deliberately limit the scope of its ruling. Structured-dismissal practice is unlikely to emerge from the case unscathed. Jevic Holding Corp., set for argument on December 7, involves a challenge to the increasingly fashionable use of “structured dismissal” to resolve Chapter 11 bankruptcy cases. This will also involve filing a separate motion with the court to ask for an extension of the automatic stay, assuming that you file within a year of the dismissal.Czyzewski v. You can file again as soon as you qualify for either Chapter 7 or Chapter 13. However, if you have suffered a substantial financial blow and cannot convert to Chapter 7, this may be your only option if you cannot get a hardship discharge. Until and unless you file again, you will lose the protections provided by bankruptcy, such as the automatic stay. This discharge is rarely granted but may be worth exploring if you have few other options.įailing to respond to a motion to dismiss likely will result in a dismissal without prejudice, which allows a debtor to refile at any point. A hardship discharge is only available if the circumstances causing the hardship were outside the debtor’s control. Justia offers a lawyer directory to simplify researching, comparing, and contacting attorneys who fit your legal needs.ĭebtors who are facing extreme challenges may apply for an early discharge if they cannot modify their plan, and they have paid creditors to the extent that they would have paid them in a liquidation bankruptcy under Chapter 7. It is usually a good idea to hire a bankruptcy lawyer in any Chapter 13 bankruptcy, but especially when defending against a motion to dismiss. They might also explain why the situation that disrupted their payments was unforeseen and temporary. If they are arguing that they can solve the problem, the debtor will want to propose a clear plan for addressing it. This might involve providing copies of pay stubs that show deductions from their wages to make payments, for example. If they are arguing that the trustee is wrong, they should carefully document the reasons why the trustee is unjustified in seeking a dismissal. They usually have just 21 days to respond, and it is critical to comply with this deadline.Ī debtor responding to a Chapter 13 motion to dismiss might argue that the trustee is wrong, or they might argue that they can solve the problem. Fortunately, a debtor has an opportunity to object to this motion. ![]() This means that their debts would not be discharged because the case would be considered unsuccessful. If a debtor fails to keep up with payments under their repayment plan in a Chapter 13 bankruptcy, the bankruptcy trustee may file a motion to dismiss their case. ![]()
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